When I reduce the horizontal size of a menu item to anything under 150, the menu items shrinks, but the spaces between the items remain the same, as
if the item was still larger.
How can I get rid of those spaces?
You have to modify the horizontal offset of neighbour item at the same level of menu hierarchy.
I.e. if the horizontal size of item at 0 level is 100 then horizontal offset of the neighbour item will be 100 (not 151 by default).